How to determine your communications budget

Four methods to arrange your budget for (sport) communications

More than a hundred years ago, John Wanamaker, a pioneer in marketing said: “Half the money I spend on advertising is wasted: the trouble is, I don’t know which half”. Luckily it has become a lot easier since the age of digital, with marketing becoming a precise and measurable science. We no longer rely on conclusions based on vague assumptions like “we advertised last week and sales increased, so it must have worked”. Thanks to the continuous advancements of technology, we can measure almost everything.

However, the question of how much money to spend on communications is still a tough one to answer. There are four common budgeting methods to determine your communications budget. But before deciding your budget, it is important to take the following aspects into account:

1. The communications budget is always part of a larger strategic plan. It serves as a “tool” to achieve your goals as cost effectively as possible with a positive return on investment. Read more on how to decide your goals and targets here.

2. All communication activities, such as advertising, public relations, events and online marketing, have different prices. Careful planning of all these different activities ensures that there are no surprises in your final expenditures.

  1. 3. Make a timescale based on your communication implementation plan. For most organisations a timescale on a quarterly basis is most practical. Always make sure to leave some budget for new opportunities in your business.

After determining your strategy, objectives and communication activities it is time to arrange your budget. There are four methods to help you figure out your budget.

Percentage method
The most common and easiest approach is the percentage method. This method involves taking a fixed percentage of your revenues and allocating that amount for communication activities. Small organisations mostly use around 20% and larger organisations often use 5 to 10%.

“What’s in my wallet” method
The what’s-in-my-wallet method is planning the expenditures based on what’s available. This is the least strategic method to determine your budget as it is not at all based on your objectives. And at the end of the day you might end up spending a lot of time, instead of money, on communications.

“Based on my competitor” method
The third method is a simple one. The based-on-my-competitor method is all about finding out what your competitors are spending and based on this you spend less, the same or a bit more. Even though it is a very accurate way to decide what you’ll need to spend to survive, it is not always a very realistic manner to determine your budget, especially when your industry includes much larger organisations.

“Goal and task” method
The goal-and-task method involves planning the communications activities required to reach your objectives, and then estimating the costs for all these activities. Although this method requires a lot of calculations, it is a very solid way to determine your budget as it is tailored to the specific goals you want to reach.

Our favourite budgeting method is the goal-and-task method as it is gives you clear insights in how to spend your budget to reach your business objectives. Do you need help with your strategic communications plan? Don’t hesitate to get in touch. If you have questions, please ask @wearepostman on Twitter.